Exodus to Australia Risks N.Z. Labor Shortage

An unprecedented outflow of New
Zealand citizens last year for jobs and better pay in Australia
is leaving the nation’s earthquake-hobbled economy vulnerable to
a labor shortage during rebuilding.

An all-time high of 45,863 citizens permanently relocated
to the country across the Tasman Sea in the year ended Dec. 31,
Statistics New Zealand said in a report released today in
Wellington. The number who opted to return was the lowest in
three years.

The flight of laborers suggests the nation may face a
skills shortfall when it needs workers for an estimated five
years of reconstruction in the South Island city of Christchurch
after a series of quakes since September 2010. Central bank
Governor Alan Bollard, who is monitoring rebuilding to assess
when to raise interest rates, last week said the exodus means
companies need to fight to find and retain staff.

“The real issues that this repair and the city rebuild are
going to suffer is inflation around labor and retention of
people,” David Peterson, general manager of Fletcher Earthquake
Recovery in Christchurch, said this week.

The company, a unit of Fletcher Building Ltd. (FBU), New
Zealand’s largest construction company, is managing about 3,500
workers in a project to repair at least 100,000 homes over the
next four years. Peterson said in an interview Jan. 30 he will
need twice as many workers within two years and is already
recruiting in the U.K. and Ireland.

$1,418 a Week

Money is the main lure to Australia, where the unemployment
rate of 5.2 percent compares with New Zealand’s 6.6 percent. The
average weekly wage in New Zealand of NZ$1,013 ($843) is 40
percent less than Australia’s A$1,323 ($1,417).

Another reason for the departures is the ground around
Christchurch won’t stop shaking.

The city and surrounding districts have been rocked by more
than 10,000 temblors in the past 16 months, including a quake
Feb. 22 that killed 181 people and closed the central business
district. As many as 1,000 city buildings and more than 6,500
homes are being demolished, while at least 130,000 homes need
repairs.

Permanent departures overseas from Christchurch rose to
7,167 from Feb. 23 to Dec. 31, compared with 4,769 in the year-
earlier period, according to government figures.

Departures to Australia will increase in the next year
because of “the lagged effects of recent strength in the
Australian labor market,” New Zealand’s Labor Department said
in a report yesterday.

Election Issue

The department’s report follows criticism of Prime Minister
John Key during last year’s election campaign for failing to
stem immigration to Australia as he had pledged in 2008.

Still, departures to Australia are forecast to ease in 2012
as employment prospects in New Zealand improve, the department
said. Departures are about 1 percent of the population, compared
with 1.2 percent in 1988 and higher ratios in the late 1970s, it
noted.

Bollard last week said economic growth may be slower this
year than he previously forecast because the rebuild is taking
longer to start. He expects reconstruction “in earnest” from
2013 rather than the second half of 2012, he told a business
audience on Jan. 27.

Rates on Hold

As a result, the central bank is “not uncomfortable” with
expectations that the official cash rate will stay at a record-
low 2.5 percent through this year, Bollard said after his
speech. There is a 32 percent chance of a rate cut by June,
according to swaps prices from Westpac Banking Corp. (WBC)

Net immigration to all nations by New Zealand citizens rose
to 36,454 last year, the most since 2008, according to
government figures.

“We do lose a lot of skilled people,” Bollard told
reporters on Jan. 27. “It’s getting worse, not getting better
and it’s a challenge we share with a whole lot of other
countries.”

Construction workers are mobile and local companies “have
to fight to keep staff,” he said, adding that businesses will
tap South Africa, Ireland and other nations that have
construction workers to spare.

“Skills like that are portable,” Bollard said. Local
firms “will definitely access people and they’ll be able to get
them into New Zealand much easier than in the past.”

Work Visas

New Zealand accepted 9,400 people for residence in the
three months ended Sept. 30, according to Labor Department
figures. The total includes about 4,370 approved as skilled
migrants who have job offers. An additional 37,400 were accepted
on temporary work visas, it said.

A three-hour flight from the nearest developed economy, New
Zealand has endured prior periods of fleeing migrants. During
the early 1980s, another period when Australia was a population
destination, then-Prime Minister Robert Muldoon quipped: “New
Zealanders who emigrate to Australia raise the IQ of both
countries.”

New Zealand’s economy will grow less than 3 percent this
year, Bollard said last week. Australia’s gross domestic product
may expand 3.25 percent in 2012, according to Bank of America
Corp.’s Merrill Lynch division.

“There’s no real reason to stay in New Zealand if
prospects are better elsewhere,” said Annette Beacher, head of
Asia-Pacific research at TD Securities Inc. in Singapore. “If
you are out of a job waiting for Christchurch to be rebuilt, you
could go broke waiting.”